Eurozone Growth Drops At The Start Of the Second Quarter

euEuropean equity markets are trading lower on Tuesday due to some weaker international manufacturing data from the eurozone and China.

Latest data from Markit in Europe revealed that Eurozone business activity growth in April declined from March’s 11 month high, according to flash PMI survey data for April.

Markit Eurozone PMI fell from 54.0 in March to 53.5 in April, despite a weaker euro and added stimulus measures from the ECB’s quantitative easing bond buying program.

Chris Williamson, Chief Economist at Markit, commented about the latest data and said that the latest PMI data was disappointing, considering the recent stimulus efforts by the ECB which are intended to spur business growth in the Eurozone.

But Williamson admitted that that it’s still too early to draw conclusions about the effectiveness of monetary policy from the latest Markit PMI data.

‘The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledging recovery seen at the start of the year” Williamson said.

“However, it’s too early to draw firm conclusions about whether growth is faltering again and the effectiveness of policy. Although the PMI has pulled back from March’s recent high, the index remains above the average seen in the first quarter and is indicative of Eurozone economy growing at a reasonably robust quarterly rate of 0.4 percent at the start of the second quarter” Williamson added.

The slowdown was most felt in the economies of France and Germany which offset growth expansion in the rest of the Eurozone region.

The latest reading in April was the second highest seen over the past nine months with the manufacturing and service sector continuing to expand but not as robustly as was seen in March compared to their ten and eight month highs.

Flash Eurozone Services PMI activity index was at 53.7 compared to 54.2 in March, a 2 month low.

Flash Eurozone Manufacturing PMI at 51.9 compared to 52.2 in March.

Flash Eurozone Manufacturing PMI Output Index at 53.1 compared to 53.6 in March.

Data was collected April 13-22nd.

-Johnathan Schweitzer

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